Capital Beltway drivers are one step closer to a smoother commute after $589 million in tax-exempt private activity bonds were issued for the first time ever Thursday, June 12, by sponsors of the I-495 Capital Beltway High Occupancy Toll (HOT) Lanes Project in Northern Virginia, the Department of Transportation announced.
“This financial transaction represents a historic turning point not only for the way we finance highway projects but also for the thousands of drivers who lose precious time stuck in traffic on one of the nation’s most congested highways,” Transportation Secretary Mary Peters said.
The $589 million in private activity bonds – issued by the Capital Beltway Funding Corporation, a nonprofit Virginia corporation – is part of an estimated $1.9 billion finance package to fund the 14-mile project. It includes two new variably priced HOT lanes added to the Capital Beltway between Georgetown Pike and the Springfield Interchange. Once construction is finished in 2012, there will be two additional lanes on each side of the Beltway. The two existing middle lanes then would be converted to HOT lanes with prices that vary depending on traffic volume – ensuring that traffic in these lanes keeps moving at all times.
Two private companies – Transurban and Fluor Enterprises – will finance, operate and maintain the express lanes using facility revenues to repay the $589 million in private activity bonds as well as a $589 million DOT direct loan. The loan was made through the Department’s Transportation Infrastructure Finance and Innovation Act loan program, which encourages private sector participation in the financing of highway projects with flexible repayment terms. The Commonwealth of Virginia also is providing significant resources to the public-private partnership.
As part of the surface transportation legislation signed in August 2005, private companies building and operating public use facilities are authorized to borrow up to $15 billion nationwide on a tax-exempt basis to build highways and certain freight facilities. So far, DOT has authorized the issuance of $5.6 billion in these private-activity bonds to seven projects around the country, including the Capital Beltway HOT Lanes. However, this is the first time such bonds actually have been issued.